Resolving disputes through mediation

Resolving disputes through mediation

With mediation being increasingly promoted as an alternative method of resolving disputes, Sam Beckett explains what it is and what it has to offer.

Resolving disputes through mediation

Mediation is the use of a trained neutral third party to assist the parties in a dispute to negotiate a settlement.

It is important to note that the Mediator does not make any decision nor indeed any recommendation for settlement; he/she merely acts as a facilitator. If the parties cannot come to an agreement, they are free to continue with Court proceedings. Normally each party bears its own costs of the mediation, including sharing the cost of the mediator.

Process

The process is essentially voluntary but increasingly it is becoming a requirement of the procedure involved in running an action that the parties should attend a Mediation session. In Northern Ireland the Commercial Court encourages the parties to attempt a resolution of their issues by a suitable form of alternative dispute resolution and in appropriate cases the Commercial List Judge may require the parties to justify a decision not to mediate. It is generally accepted that mediation works best when both parties are willing to participate. However, it is also increasingly the case that parties to commercial agreements require the inclusion of a clause which provides that the parties agree to mediate any dispute and only in the event of failure to reach settlement in mediation will they proceed to litigate it.

Even when agreement is not reached at the mediation the process might assist the parties to have a more realistic view of their case and promote an earlier resolution of the dispute by way of further negotiation.

Advantages

There are a number of advantages for the parties.

• Time and cost: mediation can lead to the settlement of complex disputes nearer to the outset thus saving the parties time and inevitably cost.
• Preserving relationships: mediation can be particularly helpful where there is an ongoing relationship between the parties.
• Privacy: many parties prefer a private resolution rather than a public hearing.
• Satisfaction: an agreement made voluntarily and to which the parties themselves have made a significant contribution is preferable to one imposed by a Court or other Tribunal.
• Creativity: the Courts are only able to provide a limited range of remedies whereas in a mediated settlement the parties are not so constrained and this can lead to a wide range of possible outcomes in keeping with the interests of the parties.

On the other hand the consensual nature of the process and the requirement of goodwill on the part of all parties means that where one party is unwilling, they cannot be forced into the process. However, if parties refuse an offer to mediate without good reason then, even if they win their case, the Judge can refuse to award them some or all of their legal costs.

There is a fear that by agreeing to engage in mediation, a sign of weakness may be demonstrated. However, research shows that approximately 90% of disputes have been resolved in the UK where skilled mediators have been used. To make the process worthwhile financially it is important that it should be engaged in at an early stage in the dispute but with the absence of the rigors of discovery and other mandatory processes available in Court based litigation, the proverbial "smoking gun" may not emerge. However, mediation is intended to bring together parties who realise that the dispute between them is harmful, will be costly and inevitably there will be a big loser.

Mediation is not appropriate in every dispute and in cases which involve principle, interpretation or the like, these can really only be dealt with by the public Courts. However, it does have a role particularly in commercial disputes and should be considered by clients before they become too entrenched and completely ruin an ongoing commercial relationship.

Sam is a Partner in the firm's Commercial Litigation Department specialising in construction and general commercial disputes and licensing; he can be contacted at sam.beckett@lestrangeandbrett.com.

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